CEO BLOG - PROFITABILITY STILL ELUSIVE BUT FUTURE POINTS TO A GLASS HALF FULL FOR CUSTOMERS

30 April 2024

Despite a small glimmer of hope from local economists on our general economic outlook, the hospitality sector is still finding it troublesome to navigate away from a challenging environment while at the same time remaining one of the most important sectors here and across these islands.

The cost of doing business is stuck in an upward trajectory with VAT, rates, and additional employer contributions a constant headache across the industry. This in turn has forced prices up as these costs have to be passed on, despite best efforts. 

Whilst the profitability of the sector remains elusive and business failures are unfortunately stacking up faster than ever before, we might be on the cusp of a change in fortune according to the recent figures collated by insights and data agency CGA through their cost of living pulse. 

Let’s not run away with ourselves, but the latest analysis shows that there has been an uplift in more people going out month on month, which gives us all reason to be hopeful.

An interesting point to note is that whilst around a third have reduced the number of drinks they might have in an evening, the same number again are increasing their spend, seeking quality over quantity. Cocktails over the last month are on the up.

Another nugget of relative joy shows that after an overseas holiday, consumers here are thinking about a night out as their second highest choice when it comes to how they might enjoy themselves over the next few weeks and months. That surely points to consumers being more optimistic about the future.

The insights from CGA show that despite the rise in household bills and the challenges around disposable income, almost 2 in 5 are increasing their frequency of eating and drinking out. This proves that people want to get back out there and are getting out there. It also tells us that further growth is possible.

It certainly has been some time since we have been in a position of growing confidence. There has been a cloud around us all, with good reason. It’s not often we as a sector have allowed ourselves to lift our heads, but as we move into the summer months, we can only but hope for a renewal and reinvigoration. 

Let’s think about how we can cultivate and nurture that feeling of optimism further and turn it into greater levels of trade. It’s now time that government works with us, recognises this opportunity, and examines and unblocks the economic barriers that are holding us back.